An informative article from Claude Rosenthal at Black Mountain Community Bank:

Just before the end of the year I received a bulletin from FHA that you may find interesting and useful. Hopefully you can uncover new buying prospects as a result. At the very least, you will be armed with additional information that will help you answer questions from prospective buyers during that interviewing period.

FHA in Mortgage Letter 2009-52 announced the follow rules that pertain to whether or not people who were involved in Short Sales of their previous home, are eligible or not for a new FHA Loan:
Borrowers are NOT eligible for a new FHA-insured mortgage if they pursued a short sale agreement on his/her principal residence simply to:

• take advantage of declining market conditions, and
• purchase at a reduced price a similar or superior property within a reasonable commuting distance

Borrowers Current at the time of Short Sale

Borrowers are considered eligible for a new FHA-insured mortgage if, from the date of the loan application for the new mortgage

• All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and
• All installment debt payments for the same time period were also made within the month due

Borrowers in Default at the time of Short Sale

• Borrowers in default on their mortgage at the time of the short sale (or preforeclosure sale) are NOT eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.
• Note: Borrowers who sold their property under FHA's pre-foreclosure sale program are not eligible for a new FHA-insured mortgage from the date of that FHA "paid the claim" associated with the pre-foreclosure sale.

Exceptions: Lenders may make exceptions to this rule for borrowers in default on their mortgage at the time of the short sale if:

• The default was due to circumstances beyond the borrower's control (such as death of primary wage earner, long term uninsured illness, etc....and
• The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrower's control that caused the default

Ok, so there you have the shortened version. If you need or want more specific information, I encourgage you to go the the HUD site and pull off the Mortgage Letter.

Claude Rosenthal
Vice President, Residential Lending
Black Mountain Community Bank
1700 W. Horizon Ridge Pkwy #101
Henderson, NV 89012
Dir: (702) 990-5920
Fax: (702) 990-5950
Cell: (702) 524-1816
E-Mail: Claude.Rosenthal@bmcb.com

Keep up with me on Twitter!

This loan program has no down payment, no closing costs, and no fees. Review details here.